Hubris or Talent? Estimating the Role of Overconfidence in Chinese households’ Investment Decisions

We document the extent to which overconfidence in one’s financial literacy (FL overconfidence) plays a role in households’ reported financial risk aversion and their actual investment behavior, using data from the China Household Finance Survey. We measure FL overconfidence by estimating the gap between people’s self-reported financial literacy and their objectively measured financial knowledge. Our results indicate that FL overconfidence is negatively associated with self-reported financial risk aversion. Additionally, FL overconfidence is positively associated with the likelihood of having a brokerage account, holding risky financial instruments (other than just stock), and a proportion of assets allocated towards risky assets. We then use machine learning methods to predict which factors are most important in determining households’ risky investment decisions. We find that overconfidence plays a significant predictive role. Our work signals that households’ risky investments may be driven by biased optimism about their own financial know-how rather than their actual knowledge. We conclude that financial literacy programs should not only teach financial concepts but also make program participants aware of their own biases

The p -Adic Schrödinger equation and the two-slit experiment in quantum mechanics

p-Adic quantum mechanics is constructed from the Dirac-von Neumann axioms identifying quantum states with square-integrable functions on the N-dimensional p-adic space, Q_{p}^{N}. This choice is equivalent to the hypothesis of the discreteness of the space. The time is assumed to be a real variable. p-Adic quantum mechanics is the response to the question: what happens with the standard quantum mechanics if the space has a discrete nature? The time evolution of a quantum state is controlled by a nonlocal Schrödinger equation obtained from a p-adic heat equation by a temporal Wick rotation. This p-adic heat equation describes a particle performing a random motion in Q_{p}^{N}. The Hamiltonian is a nonlocal operator; thus, the Schrödinger equation describes the evolution of a quantum state under nonlocal interactions. In this framework, the Schrödinger equation admits complex-valued plane wave solutions, which we interpret as p-adic de Broglie waves. These mathematical waves have all wavelength p^{-1}. Then, in the p-adic framework, the double-slit experiment cannot be explained using the interference of the de Broglie waves. The wavefunctions can be represented as convergent series in the de Broglie waves. Then, these functions are just mathematical objects. Only the square of the modulus of a wave function has a physical meaning as a time-dependent probability density. These probability densities exhibit the classical interference patterns produced by `quantum waves.\u27 In the p-adic framework, in the double-slit experiment, each particle goes through one slit only. Finally, we propose that the classical de Broglie wave-particle duality is a manifestation of the discreteness of space-time

[Monclova] Photograph of Woman Smiling

Photograph showing a woman standing on a tree trunk and smiling while posing.https://scholarworks.utrgv.edu/miscphotosedinburg/1469/thumbnail.jp

[Agriculture] Photograph of Dirt Canal with two people

Photograph of a dirt canal with one person standing in the water, and the other person standing on the right bank. Part of Shary Collection.https://scholarworks.utrgv.edu/miscphotosedinburg/1601/thumbnail.jp

[Agriculture] Photograph of Grapes

Close-up photograph of several clusters of grapes or berries hanging from vines that are propped up with wooden sticks. Part of Shary Collection.https://scholarworks.utrgv.edu/miscphotosedinburg/1646/thumbnail.jp

[Military] Postcard of Three Cavalry Men Holding Up Their Catch

Postcard of three unknown men holding up their catch from fishing. In the background buckets and two automobiles are visible.https://scholarworks.utrgv.edu/miscphotosedinburg/1868/thumbnail.jp

[Harlingen] Photograph of Senator Ted Kennedy at Rally

Photograph showcasing Ted Kennedy at the Mondale/Ferraro rally.https://scholarworks.utrgv.edu/miscphotosedinburg/1937/thumbnail.jp

[Brickmaking] Photograph of Brick Plants in El Paso and Reynosa

Aerial photograph depicting the brick plants located in El Paso, Texas and Reynosa, Mexico.https://scholarworks.utrgv.edu/miscphotosedinburg/1979/thumbnail.jp

Restaurante: Taco Rush - a

Signage of Taco Rush. Logo depicts a cartoon style young man with a sombrero. He has a brown mustache. He is holding a taco with his right hand and giving a thumbs up with his left hand. Below is Taco written in red lettering with a thin white outline. Rush is written in green with a thin white outline as well.https://scholarworks.utrgv.edu/valleyiconography/1172/thumbnail.jp

[Edinburg] Photograph of White Crosses in Cemetery

Photograph of white crosses in the Restlawn Cemetery in Edinburg, Texas.https://scholarworks.utrgv.edu/miscphotosedinburg/1408/thumbnail.jp